KARACHI (November 26 2002) : The State Bank of Pakistan has issued first two licences for the formation of foreign exchange companies to deal in the foreign exchange business.
The two licences were issued to National Bank of Pakistan and H & H Exchange Company. The latter is a money changer firm.
The State Bank has already issued eight NOCs to the applicants who need to be registered with the Security and Exchange Commission of Pakistan (SECP).
After registration with SECP, the State Bank will issue licence allowing the licensee to start operating within three months.
The eight companies which have been issued NOCs are Khanani and Kalia; Global Exchange Company; Sheikh and Khawja Company; Glaxy International; Zarco Exchange Company; Dollar East Exchange Company; Universal Exchange Company, and Pak-Kuwait Exchange Company.
The exchange companies are allowed to charge services cost and no limits have been imposed on them regarding service charges.
The transformation of money changers into 'Exchange Companies' would enable them to transact foreign exchange within and outside the country. Currently they cannot send foreign exchange out of the country and no overseas Pakistani or any other person can use this channel to remit forex through them to Pakistan.
The 'exchange companies' would be authorised to deal in foreign currency notes, coins, postal notes, money orders, bank drafts, traveller cheques and transfers. Besides purchase and sale of foreign exchange from and to individuals, they may also sell foreign exchange to corporate bodies for effecting remittances on account of royalty, franchise, technical fee, repair and maintenance.
The exchange companies can sell their surplus foreign exchange in the interbank market, which will provide additional liquidity and help in deepening the interbank foreign exchange market.
The requirement of Rs 100 million capital for the formation of exchange companies has been a point of criticism as the money changers find it difficult to arrange the amount. About 469 money changers were working in the country, 150 in Karachi, 78 in Lahore and 71 in Rawalpindi.